if you google 'unable to connect localhost firefox' you will see that it might be a firefox setting so try it with another browser to see if that works - if it does you can try to figure out how to let firefox allow connections to localhost. You can test if the server is up and running by opening a command window (cmd.exe) and use ping localhost if it gives valid pings the script (server) works - so you will have to work on getting it to work in your browser. (Edit see comments by Lexikos below)

I'd like to be able to display images in pages and stream mp3 over http - I recall sparrow did that by reading/parsing a list of mimetypes.

You can test if the server is up and running by opening a command window (cmd.exe) and use ping localhost if it gives valid pings the script (server) works

That will only prove that the computer responds to ICMP (specifically, ping) requests on its loopback interface. It will not prove that the HTTP server is running or that the system will accept TCP/IP connections on any particular port. Some systems don't respond to ping (from outside) but still accept connections on specific TCP ports. I think you'd be hard-pressed to find a system that doesn't respond to ping localhost.

What you can do is attempt to connect to localhost:8000 using telnet or PuTTY, or see if port 8000 is listed by netstat -a.